Monday, December 10, 2012 Agency Hearings 8:30 Am Meeting opened. Chairman Nicholas: process discussion. All hearings are prepatory for the new members. Purpose for old members is continuity. New members may use mic and ask questions. May use portable microphone. Limited time to learn a lot of information. When we yield, member asks quick questions until you have exhausted them. Look towards the chair to make sure you are pacing it. …How the markup process is going to work. You need to know where to write notes and how to write them. Need a thorough note so you can remember it in March when the budget is marked up. We have the Ipad. We will do a short process of marking up to show how quickly we have to do markup. 8:36 AM Don Richards LSO Budget Fiscal Division What materials and where located. Supplemental budget with sizeable reductions, IT division, chair and member turnover, integration of Ipad. Five volumes of budget. 3 large ones for executive branch. Judicial branch, council on judicial ethics. All documents available on the web site and on the Ipad, on the file directory structure and on the calendar. File directory is available via a PC. Wyoleg.sharepoint.com Training on Wednesday. Hard volumes, share point and internet. Digitally revised the budget. AandI presented budget last week, redid it with tabs for the governor recommendations, made the file searchable with a native format. Original and digitally revised are on the ipad and the share point. The thumb drive has info routinely requested. Wyodot, game and fish (approved by commission), state plane usasge, dd waiver list, bills from last year… The naming convention is the agency number, followed by an acronym of the agency and a short document description. Multiple locations. Agency handouts will be circulated in hard copy. Numbered same fashion, electronically and paper copy. Easiest way is to work from the calendar. Touch calendar. Example is governor’s meeting today. Home page, share plus, share point, . Example Members may have taken budgets home from the Nov meeting. 8:45 Chairman Nicholas. When you pull them up on share point, can not write on them. I annotations, must be quick enough to pull up edited copies and go through to see notes. Write with stylus to read the notes. Before the governor comes in go through a mark up process. Is any one planning on writing their notes on ipad and relying on it for markup? Harshman and Wallis are trying to. 8:46 pm Richardson Have Kari go through governor items, then practice a markup Public Defenders office, agency 008, page 426 of volume 1, columns of budget table ..by agencies, then by division, then program by division level, divisions into units. At top left corner, division is public defenders statewide, the division is the same name. Col 1 has the object and subobject codes. 100 code is personal services, 200 is support series, 300 is cost allocation (state charges), 400 is central and data services, 500 is space rental (leasing costs), 600 is grants and payments (ex. Food assistance), 800 is non-operating expenditures, (ex budget authority to liquor division – an accounting mechanism) 900 series is contractual. 100, 600 and 900 are the bulk of the expenditures. Next page is a series of revenues, primary source is general funds, (local funds match in special revenue), an accounting of the authorized personal, full time and part time is final. Budget approved last year, approved budget reductions of 8%, col 4 is IT consolidation, col 5 is supplemental request, col 6 is governor’s adjustment to all of cols 3, 4 and 5. Not broken out if he denied an 8% or a supplemental reduction or increase, all collected in col 6. Consolidation of 3 plus 4 plus 6 is the revised appropriation in column 7. Column 3 and column 4 is new this year. 8% reeductions and IT consolidation are separately accounted for. Only if gov made changes to it, are in col 6. Line 520 example. Page 442. Jump to end of each agency is summary of personnel activities, e.g., IT consolidation. Nicholas: Revised appropriations includes governor’s recommendation. Richards: Have to include 3 and 4. Governor’s does not includes 8% reductions. Nicholas: Appear in modifications? Nicholas: Col 7 combines all of his recommendations. If do motion for Governor’s recommendations. Approves profile sheet with all the column. Richards: Page 10. Shows Governor’s recommendation is disaggregated manner (page 9). On next page is discussion of supplemental request. 9:00 am Governor Mead enters. Nicholas: We are live on internet. Make sure speaking into live microphone. Everyone is free to ask questions. We will come back to topics of training on ipads. Governor: Pleasure to be in front of you again. Fortunate to have a citizen legislature. Appreciates work of Committee. In preparing his budget. Started out reflection on last 10 years, assessment of today and look forward to future. 1) Budget more than doubled over the last decade. Can’t be sustained. Accomplished a lot and have remarkable revenue. No longer the case. Mineral prices uncertain. Gas prices reflect the changes. 2) Face the fiscal cliff. 3) Face challenges of ACA and see Federal deficit exploding. See what they have done with AML funds and purchase of lands in Grand Teton. Federal government not meeting obligations. Uncertainty regardings fires and floods previous year. In last year agency report possible reductions for budget cuts. Peaks and valleys for minerals revenue impact on budget. Mixed message to public. How in future do we have trend line for expenditures in boom and not boom times. Overall agencies are 6.5% reductions including position reduction. New funds in one time spending. Majority of on-going for ACA expansion. Asked for $11 million in compensation for Hays study. Met obligations of big ticket items – fires, CAPCON construction, local government, landfills, capital construction (UW and Military). Fiscal policy—are we going about it the right way. Smooth trend line in budget. Build LSRA – rainy day account. 1) Rather than 1% severance to LSRA 2) COLA funds. Needs for new schools less than 5 years ago. Budget anticipates smoothing trend. Discussion of CREG. Do not project capital gains income. Treasure office has reaped capital gains – exceeded by $50 million in the past year. This is not included in the projection. Difficult in making budget reductions when extra money is later stated in the media. Proposes discussion what is CREG for and what should be done in capital gains. Have transparency to cuts process – saving, spending. Two agencies: 1) DOT request for roads is rejected. Need a predictable path for funding for roads. Propose fuel tax increase or alternative to provide the same amount from severance tax. Salaries – asked for $11 million (merit pay included). Evaluation for merit pay has come a long way. He suggests that the process is sound although needs to get better. 2) Department of Health. Asked for Medicaid expansion and he rejected. Rules and regulations grow every year. Important for Wyoming to provide clarity and reduce them. Asked for $250K for study. Summary of requests for irregular or abnormal capital gains: 25.8 M Gillette Madison Water project, $30 M Landfills and $5 M local grants. Nicholas: Look at fiscal profile sheet. What we are starting with $84 M general revenue. If look at goldenrod, see rainy day fund amount. Soft amount not transferred to LSRA of $4.6 Million. CREG report of new revenues of $79 Million. How he got to $84 Million -- $4.6 M start, $79.5 M CREG and $5.1 CREG to get to figure. Jones: agreed with analysis Nicholas: Total expenditures $40 M more than general revenue budget. Jones: One way of looking at it. Nicholas: About $120 M of total expenditures recommended. Jones: It is $131 M total recommended. 9: 25 am. Nicholas: $70 M plus $60 for fires. Jones: Funds for Health Department Nicholas: $130 plus $60 M for fires results in $190M for expenditures. Nicholas: Irregular is not on the profile. Governor: 9:27 AM Nicholas: Combination of CREG estimate plus the difference on the Goldenrod of the 19 million moving into the GF, less the 15 million hard appropriations…total of 89 million, add back in the budget savings for the 6.5% avg savings of 60 million, …leaving about 20 million,…drop below on bottom line have 60 million out of LISRA fund for fire, 190 million of spending, not reflected is 81 million reflected from the irregular capital gains. Have about 190 million of new spending, source is CREG forecast and budget savings. Jones: The governor’s proposed repurposing of AML funds. Previously provided for High plains gasification, results in additional funding for the engineering bldg. at UW. Nicholas: repurpose recommendation from minerals committee Governor: 10 million, no recommendation made yet. Nicholas: do you want to keep it there or do you want to make a recommendation? Governor: my thought is to keep it there. Here today, keep it there Nicholas: Before markup, recommendation to hold. Second issue is language in the last budget specific enough. Money spent on development of..technology. Minerals committee knows more about that. Before markup want to hear more Bebout: for the 90 million, how much is one time and how much is ongoing? Governor: Appropriations for capital construction, UW and Guernsey, leverage federal money to provide infrastructure at Guernsey, bldg., 30 million will not get to the 100 million. It is one time in terms of funding..not in terms of what is needed. Wildlife funded through years, 30 million Gillette Madision, have 58 million left in obligation so 30 million is one time out of reg exps. And remainder out of abnormal funding…data center one time funding. Legislature will make decision at year end for local govt. Landfills obligastion of 225 M to 450 million, put in 15 million last year, asking 15 million more. Depending on irregular capital gains, put in more. Not built into std budget. Ongoing for ACA and 8.5 million for salary increases. 9:35 Nicholas: Does that include ACA and salaries. Govenor: It does not include salaries. . It does include the ACA. Nicholoas: Biennalized out for next year Jones: 12.8 million on profile? Some of it is one time. Nicholas: Brett, come back with this sheet and identify the amounts that will be biennialized. So unless it is one time pay increases it would be bieenalized? Jones: 2.5 million is one time and not bieenalizied. Nicholas: 36 million bienalized Jones: 9 million of the 12.8 million. in dept of health Edmonds: Thought process of listing as one time merit pay? Govenor: Good question. Employee evaluations. Do not know if that is the right amount. How it will be distributed. AandI has provided 3 proposals. Must have competent or above rating to receive any of the merit pay. It is a start. Will not be built in versus the 8.5 which will be built in. Meier: Market pay adjustmen funds. Does any go to judicial branch? Governor: Staff will be eligible but not judgers Meier: 11% increase in budget prior to reduction…where are we right now as far as percentage growth compared to previous biennium? Jones: Would have to take closer look…assume speaking to total funding or annual budget. 112 million is one time funding in nature. Looking at standard budget, the change is fairly minimal. Meier: figure perecentages..we have doubled over the last 10 years, need to break down what was ongoing, ..better handle on ongoing over the last 10 years. Jones: we can do that. With respect to 8% we have identified the one time versus ongoing so can extrapolate. Nicholas: Analysis ..go back to 10% reductions in Freudenthal administration. Within one year the total cost of wages and benefits were in excess of the cuts in numbers of personnel as a result of the Hay study. Issue with respect to cost of retirement and of health insurance. We reduced number of positions but total cost remained the same due to the other issues. Governor, if you propose that we put in salary adjustments, add retirement fund issues and health insurance… Governor: Have tried to reduce positions over the past year. Did not do a comparison of net effect of losing employees versus proposal of salary increases. 16.9 million overpayment of insurance premiums used as a guide to get to the 11 million estimate for increase in employee salaries. Not the same dollars. 16.9 million goes into the auditors office. Can make comparision of reduction of personal versus salary increase Nicholas: Health insurance Governor 16.9 million Nicholas: Lucky year or are premiums going down. Governor 9;47 Savings on health ins. Jones: 3 sets of projections – EGI projections, Health Ins in block grants, Nicholas: Family rate on state policy 8% Jones: More families on state policy. State picking up share. Savings and surplus flow into fund. Nicholas: Increase in 100 series. Jones: EGI revised projection? Hesitant to provide Nicholas: Retirement contribution, health care cost, salary increase affect on budget. Hiring freeze. Gov: Vacant positions 9:55 Meier: Accuary on retirement funds, mortality, impact on retirement fund VonFlatern: Capital gains profile. 08 recession Governor: Treasurer’s office profile of capital gains. Issue: Capital gains not considered in Gov budget Irregular capital gains, Madison Formation, 10:00 Nicholas: 3 topics to follow up on Governor: Treatment of funds; Rainy day funds: Nicholas: Growth of funds Governor: Short term investments vs long term; LARA Perkins: Discussion of forcast of capital gains. Casper meeting at Oil and Gas commission December 20th. Invite to Gov office. Funds held in reserve. Loss of corpus. Capital gain losses. Nicholas; Set up of permanent trust fund. Targeted 5%. Shortfalls vs increases. Alter spending policy anticipates increases. Should we forecast up to 5% 10:10 Governor: Estimates of funds; Oil and gas prices; Inflation increased corpus. Building inflation proof estimates. Nichoas: Statutes and long term policy for CREG. Statutory limitations for spending. Mai: Spending amount and projects: 2013 projections; 10:15 Mai: General fund portion of SPRA; Building corpus. Mr. Mai: Co-chair of CREG Nicholas: 5% available? Mai: Change spending policy vs CREG. Need to control spending of standard budget; 10:20 Nicholas: Spending policy amount 5%. On-going costs; One-time funding; Accurate forecast; fixed income for on-going expenditures; Governor: 21/2 percent; cuts vs capital gain income; VonFlatern question for Governor Steward: Opening remarks of Governor: Spending driven by revenue; budget cuts don’t result in budget reduction; Question to Governor: 10:25 Governor: Budget cuts vs built in spending: Gov budget-small increase in one-time spending; Special requests vs standard budget; Cuts of $60m one-time requests. Steward: Supplemental budget requests; what is urgent? What did’nt we anticipate? Governor: Discussed 18m expenses: Salary increases/ Hay Study; ACA expansion-manditory; Steward: Medicad; Overall numbers-cost savings. Federal Gov. living up to obligations. Medicad expansion? Great needs from Native American community; 10:32 Governor: Looking at all information; State benefits vs other states with full expansion; Optional expansion-No. Numerous Rules & Regulations with optional expansion. 138 percent; Federal Gov. with subsidy; 200m goes unpaid in Wyo. Decision based on what is best for Wyoming. Steward: Native American Community-zero financial impact on Wy. Governor: Federal gov contribution: 100% then declines; Address needs of 30,000 people? Looking at all view points. Edmonds: What is a true one-time gov expenditure? One-time vs on-going; 10:40 Governor: One-time expenditure; Built in budget difficult to pull out Edmonds: Governor’s recommendation of 8% claims; Spending authority on increase; Governor: Premium holiday problematic; Jones: Governor’s authority to retain spending authority; Agency federal funds; 10:45 Wallis: Question on gas tax; Reasons; Farmers and ranchers; Incentive for natural gas vehicles; people concerned about future; Is gas tax right funding mechanism; Governor: Long-term funding: long-range planning; contractors need to know the funding level; Need for fuel tax: Previous session rejection of 1 /12 & of Last increase-14 years ago; Compare with other states; Use fee; open to all ideas; Buying power of tax decreased; Out-of-state drivers pay half of tax; 10:50 Governor: need to maintain roads; expenses; long-term funding stream; Proposed 10 cents; 10:50 Nicholas: Ten minute break; back at 11 a.m. 11:13 Nicholas: Another question? Governor: Clarification of Steward question. Subsidy for private insurance. Nicholas: Wednesday powerpoint on Medicaid expansion. Edmonds: Gas tax – source of funding Governor: Prior proposal to take ½ of 1% and divide into thirds. The 1/3 to highways was $50M at the time of the proposal Edmonds: Reconsider the proposal. Another source is toll roads. Legislature did not consider. Was not in favor of registration fees increase. Esquibel: Favor a phased in gas tax? Governor: Does know what that means in terms of funding. Would want a corresponding fill-in if phased in. Nicholas: Questions Harshman: Similar to snow machines Berger: Thank you Governor for presentation. 6.5% cut lining up for 2015/16 budget. Where would you go next for government services? Governor: In terms of need – something like the fires need to be proactive. Predict that in the next two years and beyond trying to flatline. Make sure have adequate savings for emergency. Flat budget for predictability. Try to be conservation with respect to Federal Government. Berger: Volatility of Federal Government. 11:20 Governor: Value of being liquid in savings during these uncertain times. We can appropriate if he is wrong. Berger: Freezing of personnel and down to programs. How will analyze programs? Governor: Regular agency wide cabinet and subcabinet meetings. Into process of considering how to do a better job. Didn’t want to cut certain programs, e.g., UW, WICHE. Meier: Questions 2015/2016 Department of Health cuts, elderly and disabled. Do you support everything agencies have brought forward Governor: Need time to consider Meier: When looking at cuts in agencies, coldbed methane, have those agencies come forth with need for positions. Governor: DEQ – there were concerns from industry regarding permitting. He made a request that was denied. Consultant to DEQ made recommendations that resulted in moving around to support. 11:28 Bebout: Go back to Medicaid. Reservations about state exchange. What decisions regarding federal or state exchange. Governor: Working group on exchange. Not much interest from other states in joining another state. Asked for study for federal exchange. Will not go to state exchange. Not sure of rules for federal exchange. Edmonds: Out of $100K passed, is study to implement. Governor: $100K for study to figure out the right way to go. Edmonds: For steering committee? Governor: $100K may be what we need 11:33 Nicholas: Budget request with respect to health, adjustments (waiver, etc) requested. Does legislature need to address all of them? How to get them started? Governor: Statutory request for change in legislation. For psychiatric treatment a two part issue – court decision regarding facility and its implication for matching funds. DD waiver -- $1.5 M addressed for waiting list. Goal to reduce waiting list. 11:38 Nicholas: Director Forslund of Health to come in with outline on Wednesday and discuss waivers. Coordinate with LSO Legislative staff and Labor Committees Governor: Letter with legislative changes potentially needed for Dept of Health and more broadly outside of changes that are needed. Nicholas: Get legislation under drafting before session. Looks like have to give more authority. Governor: Will prepare the list Hastert: Questions are on DD and early childhood intervention. Hastert: Was there discussion of a timeframe? Concern with denying of funds. Governor: Started for us with concern for authority. Dir. Forslund better able to address. Nicholas: Dir. Forslund back on Wednesday to discuss changes. Labor committees may not be ready. Wants to get Governor out in the next few minutes. Dir. Forslund provided what legislative changes needed. Hastert: it works for him to wait until Wednesday. Nicholas : Other questions. Thanks Governor for budget message. Governor: Thank you committee. 11:44 Nicholas: Gray is up next. Budget 001 Gray: Summary – Budget hasn’t changed since previously met. Change in 900 series of $168K. Change to Policy Office Budget – HCMS contract. Nicholas: Go through in order. Gray: Bring Microsoft into Cheyenne need replenishment of money. Nicholas: Talk to Business Council. Is bubble still out for data centers? Gray: Details regarding bringing in businesses not shared immediately. Difficult to see longterm outcome for data centers. Nicholas: Who best to talk? Gray: Bob Manson Nicholas: Ask for nne page on data centers and return on investment. Edmonds: $5M spent on 20 jobs. Is it worth risk? Nicholas: Cost benefit for Microsoft – what got out of it? Also case for recommendation and what will be cost benefit return. 11:50 Gray: Dr. Gardner contract to track services. Contract renegotiated at reduced rate. Nicholas: Need information on what direction the contract is going. There ought to be some report. Gray: Clean coal task force technology. UW staffing results in savings. VonFlatern: 10% of what? What is original budget? Jones: Reference in narrative on page 17 - Original reduction is 8% for endangered species. The comment is modification of original reduction to 10%. It is part of overall for 10% Gray: Administrative costs paid for UW. Money has been sitting in Governor’s office. So reduction reflects money not using. VonFlatern: How it is written is wrong. Gray: It is wrong. Bebout: None of this included in SCR budget? Or general fund budget? Gray: Not exactly sure. UW providing administrative staff. The use of the money from Governor’s office never occurred. 11:56 Gray: Homeland Security - $69K cut. General fund match is being made by in-kind contribution from UW to Federal funds. Gray: $57K cut due to give up because not have historically spent on flood. Nicholas: Combination of communications and disaster preparedness. VonFlatern: Consequences to unit on page 23. Gray: The State Forester pays for Guard out of his budget. Apologizes for verbage. 12:00 p.m. Gray: $15K reduction in Homeland Security grant programs. Gray: ESA funding cut for endangered species. Grant to Game & Fish and UW. Looking at historic funding spent – not necessary. If change in circumstance might be revisited. Nicholas: Taking 24% out of this budget that rolls over anyway. For ESA have to be cautious. Part of reason built up to high level don’t know when something will come up. Not really seeing a reduction. Gray: It is part of the process – part of budget not using. VonFlatern: Page 31 Are license fees connected? Gray: It is specialized program and not regular part of program. VonFlatern: Support for endangered species not related? Gray: Special project to study and not part of regular work. Jones: IT consolidation. Page 15 policy office reduction related to funds moved to ETS. 12:07 p.m. Nicholas: Back at 1:10 p.m..